DUBAI: Most share markets in the Gulf declined on Wednesday as stocks that will enter MSCI's emerging market index were hit by profit-taking, while investors in Egypt were disappointed by unexpectedly low turnout in the presidential election.

Dubai's index edged up initially but failed to hold ground and closed down 3.3 percent. Builder Arabtec dominated turnover and was the biggest loser, falling 5.4 percent after brokerage CI Capital cut the stock to underweight from overweight.

Shares in Arabtec had jumped 9.2 percent on Tuesday after the firm said it was interested in building a new airport in Egypt. They have more than tripled this year, making them Dubai's top performer but also prompting concerns that the stock is overbought.

Most other Dubai stocks also retreated on Wednesday, including heavyweights Emaar Properties, down 3.9 percent, Dubai Islamic Bank, down 3.8 percent, and bourse operator Dubai Financial Market, which fell 3.4 percent.

All four stocks will become part of the MSCI emerging market index after trading closes on Thursday, as the index compiler upgrades the UAE and Qatar from frontier market category. All four have posted big gains in the run-up to inclusion.

But the historical experience of other markets shows that newly included stocks often underperform the index because they have become richly valued in the run-up.

Ali Adou, portfolio manager at The National Investor, said that on Wednesday, active investors exiting the market appeared to outnumber passive index-tracking funds which started entering the market this week.

"It seems like investors have been 'selling the fact' after the MSCI upgrade was finalized," he said.

Abu Dhabi's bourse retreated 2.4 percent, also dragged down by stocks to be included in the MSCI emerging market index such as Abu Dhabi Commercial Bank and First Gulf Bank, which fell 4.1 and 3.1 percent respectively.

Trading volume, however, concentrated heavily in Aldar Properties ALDR.AD, another soon-to-be-upgraded stock which bucked the trend and rose 1.2 percent.